State Bank of India Chairman Rajnish Kumar believes that credit growth and a forward movement on resolution of stressed assets are his immediate top priorities in the bank. Kumar, who assumed the charge as Chairman on October 7, 2017, after the departure of his predecessor Arundhati Bhattacharya, has served in the bank for more than 37 years having multiple assignments across different verticals, like large credit, project finance, foreign exchange and retail banking, along with two overseas assignments.
In an exclusive interview with Senior Journalist S Kumar, the SBI chief shares about his association with the bank right from a probationary officer to heading the bank, explaining the details of his strategies on how to deal with bad loans as well addressing the basic banking issues being faced by the common masses in the country. Excerpts:
Q. To start with, could you please share with me how you are feeling now after reaching at the top position in the same bank where you had started your career as probationary officer, serving more than 37 years in various verticals in different levels?
It is very humbling to head a great institution, but the feeling to get the opportunity to head the organisation, where you began your career, is priceless. State Bank of India is a great organisation and my 37 years of association with the bank has been a spectrum of wide ranging experiences. I have worked in multiple assignments across different verticals, like large credit, project finance, foreign exchange and retail banking, along with two overseas assignments. SBI has provided a vast sea of opportunities and a challenging career path as it continues to do so even now. One unique thing about working at SBI is that there has been novelty and learning in each of the assignments. I feel that the bank has helped me to grow not only in professional life but also at personal level.
Q. What is your top priority as Chairman of the bank? How would you like to handle bank’s businesses with your ‘corporate mantra’ in all respect, including issues of rising bad loans, improving assets quality, etc?
Reviving credit growth and a forward movement on resolution of stressed assets are immediate top priorities. In the long run, the bank has to emerge stronger financially and be in the forefront of adoption of technology for enhanced customer experience and cost efficiency.
Handling of bad loans requires both systemic and structural approaches. To handle stressed assets, a dedicated position of MD (Stressed Assets Resolution Group) has been created for resolution. Many more changes are being implemented to address this issue. The worst seems to be over so far as fresh slippages are concerned. Once the resolution of NCLT cases starts happening and the losses arising are absorbed by the banks, aided by the recapitalisation of public sector banks, the asset quality will show improvement. Underwriting standards, supervision, follow up and monitoring of loans are all being further strengthened.
Q. For the bank, lending opportunity in the infrastructure segment is huge. Have you set any targets or any stipulated timeframe? Apart from infrastructure, are not also there many other fields such as agriculture, MSME etc where bank can grab opportunities?
The portfolio of assets is being looked into. There will now be emphasis on what yields best return for the bank apart from lending to the priority sectors.
Q. Could you throw some light on issue of waiving farmers’ loan, any plan to minimize interest rate on housing loan and bring back minimum balance amount into savings bank account to Rs 1,000 or less as there are many account holders who can’t afford to keep even more than Rs 500 in their accounts?
An opportunity for settlement of small value non-performing assets has already been provided by the bank under Rinn Samadhan which has received huge response. Recently, we have already reduced our home and auto loan rate by 5 basis points. Our home loans are already the lowest in the industry.
The minimum account balance amount has also been reduced from Rs 5,000 to Rs 3,000 in metro centres. Besides, savings banks accounts of pensioners and beneficiaries of welfare schemes and minors have already been exempted from minimum balance requirement. For people, who can’t maintain minimum balance, they can open Basic Savings Bank Deposit (BSBD) accounts or convert their existing accounts to BSBD accounts without any fee. For accounts opened under Pradhan Mantri Jan Dhan Yojana there is no requirement for maintaining minimum balance. SBI always takes care of banking needs of all sections of the society.
Q. As far as revival of credit growth and resolving the NPA issues are concerned, what steps have you taken and how confident are you to bring it into reality in short time?
CRAR of the bank as on 30 June 2017 stood at 13.31 per cent (CET1 of 10.06 per cent, tier 1 of 10.67 per cent and tier 2 of 2.64 per cent) on the back of capital of Rs 15,000 crore raised by the bank through QIP during Q1FY18. This is against the regulatory minimum CRAR requirement of 12.10 per cent (CET1 of 8.60 per cent, tier 1 of 10.10 per cent and tier 2 of 2.00 per cent) as on March 31, 2019. At present, the bank is adequately capitalised, but I will like to strengthen loss absorption capacity further.
Revival of credit growth depends upon both demand side and supply side factors. With recapitalisation of bank, supply side constraints are expected to be removed. Additional expenditure on infrastructure as announced by the Government is likely to boost demand for credit.
Q. After the recent announcement by the Government towards major recapitalisation, is there any certain demand you are going to put in with your requirement of funds despite SBI being better positioned as compared to all other nationalised banks?
The Government has decided to capitalise all public sector banks (PSBs) in a front-loaded manner to support credit growth, revival of MSME sector and job creation as well. We expect that a fair share of the recapitalisation funds will be made available to us, as we are well positioned to leverage our strength as proxy to the economy, to drive the credit growth.
Q. After the merging of 5 associate banks with SBI to become the largest bank in the country, do you feel any immediate threats from other nationalised and even private banks?
SBI has the capability to respond to competition from other banks as well as financial intermediaries. Productivity or efficiency parameters for the bank do need to improve. The bank is doing quite well on the operating income front. Through adoption of technology and review of processes, cost to income ratio is expected to come down. Once the asset quality improves, the credit costs are also expected to come down.
Q. Your predecessor Arundhati Bhattacharya at her first Press conference as Chairperson talked tough against non-performing staff, while you were not much open after taking the charge. Can you please share your views on this issue?
My message to the frontline staff has been around the key issues of customer service, empathy, politeness and strong ethics in dealing with one and all. I have always believed that our frontline people are the face of our bank and customers are our assets. We may have the best products, technology or ambience, but if we are not courteous and polite to our customers our business will not endure.
Bhattacharya’s tenure has been path-breaking in many ways. Her initiatives have taken our bank to new heights. I hope to carry forward the 211-years-old legacy of the bank with same level of efficiency and vision like my predecessors.
Q. As far as corporate social responsibility or CSR wing of your bank is concerned, is there any specific message or suggestion you have in your mind towards expansion in different fields of society, say for the weaker section and the needy?
CSR is not new to SBI, we have been extending our ‘Service Beyond Banking’ to the society under the name innovative banking since 1973. Every branch of SBI undertook activities like blood donations camps, tree plantation etc. SBI Foundation (SBIF) has been established to undertake CSR projects that are long-term, impact-oriented, and focuses on uplifting the lives of marginalised communities in the country.
We have the right people who are heading SBI Foundation and CSR department of the bank with a common goal to reach more and more underprivileged at the bottom of the pyramid every year. The focus areas of intervention are education, healthcare, skill development, women empowerment, care for women and elderly and disability.
Q. As SBI has a large number of employees, will digitalisation and technology reduce the requirement of employees in near future? In a country where we need to provide employment, is this not something worth worrying for the youth?
This was the argument when computerisation started in the banks. The point to be considered is whether the banking system could have developed the way it has if it was still in manual mode. In five years, SBI should emerge financially very sound, cost efficient, customer friendly, new age bank.
Q. You are an avid traveller as well as a good administrator. You also love sports like badminton and others. Could you please tell how you manage yourself with time and energy?
I believe that prioritising jobs and planning ahead for the day helps a lot in managing our time well. I do the same. I try to allot a dedicated time for leisure and do not allow myself to be distracted by unimportant things during working hours. This saves me a considerable amount of time and energy to dedicate to sports and other personal commitments after ending the day’s work.